PE results were inline with my forecast.
During 3Q18, the Company recorded net income attributable to its stockholders of $113.3 million, or $0.41 per share, compared to net income attributable to its stockholders of $119.2 million, or $0.44 per share, during 2Q18. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, adjusted net income for 3Q18 was $126.2 million, or $0.45 per share, compared to $106.4 million, or $0.39 per share, in 2Q18. < Compares to my forecast of $126.4 million net income.
Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense ("Adjusted EBITDAX") for 3Q18 was $385.0 million, up 13% quarter-over-quarter and up more than 130% when compared to the same measure in 3Q17. < Adjusted EBITDAX compares to my forecast of $358.5 million.
Q3 production of 116,196 Boepd compares to my forecast of 114,000 Boepd.
Parsley Energy Q3 Results
Parsley Energy Q3 Results
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Parsley Energy Q3 Results
I have updated my forecast/valuation model for PE. I am raising my valuation by $1 to $43/share, which compares to First Call's price target of $42.29. PE closed at $24.25 on November 1st.
Of the Permian Basin pure plays, Parsley seems to have the most "insulation" from the Permian takeaway capacity issue for oil prices. They are getting hammered on natural gas prices, but gas sales were only 4.7% of total revenues in Q3. NGL prices came in way over my forecast; a nice surprise.
Parsley's hedges and pipeline contracts lock in over $60/bbl for their oil through 2019.
Their actual production keeps beating my forecast, so my production forecast for 2019 is probably too low. There is a lot of upside for us on this "Aggressive Growth" company. With $1.3 Billion in Cash Flow Form Operations, most of their 60% annual production growth is being funded by operating cash flows. They expect to generate FREE CASH FLOW in 2019.
Of the Permian Basin pure plays, Parsley seems to have the most "insulation" from the Permian takeaway capacity issue for oil prices. They are getting hammered on natural gas prices, but gas sales were only 4.7% of total revenues in Q3. NGL prices came in way over my forecast; a nice surprise.
Parsley's hedges and pipeline contracts lock in over $60/bbl for their oil through 2019.
Their actual production keeps beating my forecast, so my production forecast for 2019 is probably too low. There is a lot of upside for us on this "Aggressive Growth" company. With $1.3 Billion in Cash Flow Form Operations, most of their 60% annual production growth is being funded by operating cash flows. They expect to generate FREE CASH FLOW in 2019.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Parsley Energy Q3 Results
TPH Comments: PE Q3'18 Quick Look
Positive on Q3 oil beat and reiteration of FY capital plans. Q4 activity will toggle down to hit budget.
Sector: NAm E&P | Ticker: PE | Recommendation: BUY | Target: $49 | Close: $24.25
Market likely to breathe a sigh of relief today as Parsley reiterates its FY spending guidance of $1.65-1.75B (TPHe $1.75B). Investors had been climbing the wall of worry over the last month with concerns that drilling and completion efficiency gains would cause Q3'18 and FY spending to overshoot plans. While Q3 did indeed come in slightly higher than expected at $444MM vs. TPHe/Street $437MM/$420MM on 46 gross TILs (guidance ~38-40); management in no uncertain terms indicated Q4'18 drilling and completion activity would be dictated by FY capital guidance as commitment to their budget is a top priority (TPHe dropping TIL to hit spending plans = what investors want). On the production front, Q3 oil at 73.5mbopd beat Street at 72.6mbopd (TPHe 74.4mbopd). Company did high-grade its portfolio by divesting ~11.85k net acres for $170MM with around 1,200boepd of production (Q4 close). Additionally, PE has been able to add 500 additional net acres to its mineral portfolio, which could be a monetization or IPO candidate in our view in 2019+. EPS of 45c vs. Street of 44c.
Positive on Q3 oil beat and reiteration of FY capital plans. Q4 activity will toggle down to hit budget.
Sector: NAm E&P | Ticker: PE | Recommendation: BUY | Target: $49 | Close: $24.25
Market likely to breathe a sigh of relief today as Parsley reiterates its FY spending guidance of $1.65-1.75B (TPHe $1.75B). Investors had been climbing the wall of worry over the last month with concerns that drilling and completion efficiency gains would cause Q3'18 and FY spending to overshoot plans. While Q3 did indeed come in slightly higher than expected at $444MM vs. TPHe/Street $437MM/$420MM on 46 gross TILs (guidance ~38-40); management in no uncertain terms indicated Q4'18 drilling and completion activity would be dictated by FY capital guidance as commitment to their budget is a top priority (TPHe dropping TIL to hit spending plans = what investors want). On the production front, Q3 oil at 73.5mbopd beat Street at 72.6mbopd (TPHe 74.4mbopd). Company did high-grade its portfolio by divesting ~11.85k net acres for $170MM with around 1,200boepd of production (Q4 close). Additionally, PE has been able to add 500 additional net acres to its mineral portfolio, which could be a monetization or IPO candidate in our view in 2019+. EPS of 45c vs. Street of 44c.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Parsley Energy Q3 Results
RBC Capital Markets on 11/2/2018
Rating: Outperform
Price Target: USD 42.00
Our view:
PE's pivot to maintain current activity levels demonstrates the strategy maturation that should win over investors. We model 28% organic growth and generation of FCF by early 2H19. We are more optimistic on oil prices, so we expect a modest activity ramp in late 2019 that sets the stage for 25%+ growth and more meaningful FCF in 2020.
Key points:
• Management's strategy to taper growth and deliver FCF should be an industry gut-check. PE is a high-growth E&P that had promises of FCF but now can show FCF with solid growth within an investable time frame.
• 3Q18 recurring EPS/CFPS of $0.45/$1.12 were in line with our $0.47/$1.13 estimates. Production of 116 Mboe/d (74 Mb/d) was marginally better than our 115 Mboe/d (73 Mb/d) estimate. Capital spending of $444 million was above our $425 million estimate.
• PE sold some longer-dated inventory in the southern Midland for $170 million. Production of 1.2 Mboe/d was included. We think this is a smart strategic move because the position would not see meaningful development for a number of years.
Rating: Outperform
Price Target: USD 42.00
Our view:
PE's pivot to maintain current activity levels demonstrates the strategy maturation that should win over investors. We model 28% organic growth and generation of FCF by early 2H19. We are more optimistic on oil prices, so we expect a modest activity ramp in late 2019 that sets the stage for 25%+ growth and more meaningful FCF in 2020.
Key points:
• Management's strategy to taper growth and deliver FCF should be an industry gut-check. PE is a high-growth E&P that had promises of FCF but now can show FCF with solid growth within an investable time frame.
• 3Q18 recurring EPS/CFPS of $0.45/$1.12 were in line with our $0.47/$1.13 estimates. Production of 116 Mboe/d (74 Mb/d) was marginally better than our 115 Mboe/d (73 Mb/d) estimate. Capital spending of $444 million was above our $425 million estimate.
• PE sold some longer-dated inventory in the southern Midland for $170 million. Production of 1.2 Mboe/d was included. We think this is a smart strategic move because the position would not see meaningful development for a number of years.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group